New revenue is an obvious boon for the parent. Since MLPs do not pay corporate taxes, and distribute most of their cash flow as tax-deferred dividends, Williams Companies will collect a greater yield following the MLP’s acquisition. Williams Partners estimates 300 trillion cubic feet of natural gas exists within a 35-mile radius of the Caiman Eastern gathering system.

“expects to receive cash distributions of approximately $1.5 billion from Williams Partners in 2014, a 65-percent increase over the approximately $910 million it received from Williams Partners in 2011.”

While the parent is infusing $1 billion into its MLP, in exchange for shares, to fund the acquisition, Williams Partners units, down $1.18, or nearly 2%, to $59.88, are off. It cut its earnings guidance following the announcement. The MLP is issuing shares in addition to cash paid to Caiman for the purchase.

Williams Companies said it will

“purchase approximately 16.3 million Williams Partners limited-partner units at a price equal to the price of the units Williams Partners will issue to Caiman” and referred to the MLP’s press release on the deal.

About Stocks To Watch

Earnings reports, corporate strategies and analyst insights are all part of what moves stocks, and they’re all covered by the Stocks to Watch blog. We also look at macro issues, investor sentiments and hidden trends that are affecting the market. Stocks to Watch gives you the full picture of the U.S. stock markets, all day long.

The blog is written by Ben Levisohn, a former stock trader who has covered financial markets for the Wall Street Journal, Bloomberg and BusinessWeek.